Annie’s Mailbox: Do due diligence, even with friends

Dear Annie: Years ago, some dear friends asked us to invest in their son’s new business. They said all the partnership agreements, contracts, etc., were finalized. Mutual friends advised us not to give them any money. They said there were rumors floating around about our friends’ credibility. We thought they were mistaken. We were idiots.

We gave their son several thousand dollars. The business lasted for two months. There was no contract or partnership agreement. Our money was lost, and because they were our friends, we forgave them. We didn’t realize they were con artists. They took our money and bought a luxury car and a second home.

They’ve been sued five times in the past 12 years, mostly for failed “business ventures.” I finally wised up and ended the friendship when I caught them trying to extort money from a department store by claiming the wife slipped on the floor when I knew she hadn’t. Instead of seeing a doctor, she went on vacation.

Please tell your readers to do due diligence if they plan to participate in any business venture with friends or family. An attorney and proper legal documents are mandatory, and they should never take someone’s word for it. Don’t make our mistake. We thought we were helping our “friends.” As it turned out, they were helping themselves to our pockets. – Wiser but Sadder

Dear Wiser: Your letter serves as a cautionary tale for anyone who is considering investing in a friend’s or a relative’s business. Even people who aren’t con artists can mess up the paperwork, leaving you at risk. If the statute of limitations hasn’t expired, please consider seeking damages from your “friends” for their fraudulent practices.